Lawmakers Begin Push for New Thorough Federal Review of United Arab Emirates-Owned Company Taking Control of Major U.S. Ports in NY, NJ and East Coast
On Monday a $6.8 billion dollar deal put the operation and control of the major New York and New Jersey ports in the control of a firm in the United Arab Emirates and owned by the Government of Dubai, Dubai Ports World. Today, Senators Chuck Schumer, Tom Coburn, Frank Lautenberg, and Chris Dodd are being joined by Reps. Chris Shays, Vito Fossella and Mark Foley in sending a letter to Treasury Secretary John Snow urging him to review the deal immediately. The deal allows the UAE company to take control of most operations at six ports on the East Coast, including: New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. Except for cargo screening functions performed by the Department of Homeland Security, the Port operator is responsible for securing cargo coming in and out of the port, the port facility itself, and the hiring of security personnel. In light of these critical functions being transferred from a private company based in Britain to a United Arab Emirates government-owned company based in Dubai, the bipartisan group of lawmakers today called for the Treasury Department to carefully review the new arrangement and scrutinize all security issues before control is turned over completely.
"Outsourcing the operations of our largest ports to a country with a dubious record on terrorism is a homeland security and commerce accident waiting to happen," Schumer said. "This United Arab Emirates government-owned and operated company could be perfectly qualified to operate ports around the world, but the question that needs to be answered is whether or not they can be trusted to operate our ports in this post 9-11 world. The Administration needs to take another look at this deal."
Coburn said, "Handing the keys to U.S. strategic ports to a regime that recognized the Taliban is not a sound next step in our war against terror. I urge Secretary Snow to investigate this agreement that could seriously undermine our national security."
"Dubai has allowed terrorists to pass freely through their own country. Why in the world should we let this rogue government control ports in the United States?" said Lautenberg. "The Administration must conduct a serious investigation before any deal is signed."
Shays stated, "Our ports are a welcome mat for terrorists trying to bring weapons of mass destruction into the United States. It is critical those in charge of our ports have our best interest as their interest. I am eager to understand why the Committee on Foreign Investment in the United States approved the sale, handing over several key ports to a company based in the United Arab Emirates, and ensure it is thoroughly inspected and investigated."
Fossella said, "At a time when America is leading the world in the War on Terrorism and spending billions of dollars to secure our homeland, we cannot cede control of strategic assets to foreign nations with spotty records on terrorism. This decision seems inconsistent with American efforts to enhance our national security. The lack of transparency has left many questions unanswered as to why the UAE would be granted control of United States strategic assets."
"I'm extremely concerned with this development," Dodd said. "Our ports are major potential terrorist targets and frankly this Administration hasn't done enough to commit greater resources for their protection. I strongly urge the Administration to thoroughly investigate this acquisition."
Foley said, "Six of our largest commercial ports are being handed over to a country that is seeking to be Iran's free trade partner and has been linked to the funding and planning of 9/11. If our ports are the most vulnerable targets for terrorism and if we are at war, as the President says, we should be overly critical of handing over management of our ports to any foreign countries, post 9/11. Instead, this was done in the dead of night."
The Port of New York and New Jersey were controlled by a London-based company, Peninsular and Oriental Steam Navigation Co., the world's 4th largest port operator with operations in over 85 ports in 19 countries, including P&O subsidiary P&O Ports North America, which has operations in over 20 U.S. ports from Portland, Maine to Corpus Christi, Texas as well as Vancouver, Canada on the West Coast. But last week, the government of Dubai, United Arab Emirates won a bidding war too buy the venerable British firm. DP World's bid to buy the company was quietly cleared by a government panel without public scrutiny. The Committee on Foreign Investment in the United States (CFIUS) cleared the deal, without a public report or evaluation.
On Monday, Schumer sent a letter to Homeland Security Secretary Michael Chertoff asking him to conduct a thorough evaluation of the security ramifications of the take over and present his to report to Congress within one month.
Ports have long been considered the most vulnerable targets for a terrorist attack and experts agree that shipping containers are the best way to smuggle a Weapon of Mass Destruction (WMD) in to the United States. Only 5 percent of containers entering our ports are actually inspected, with the rest in under the control of the port operator. Nuclear, Chemical, or Biological materials could easily be delivered directly to a U.S. port, many of which are located within or adjacent to major population centers (NY-NJ, Philadelphia, Baltimore, Norfolk, Miami, New Orleans, Houston).
The Port of New York and New Jersey has seen a significant boost in sea cargo over the last few years with a substantial rise in Asian trade helping to boost growth by more than 10 percent during the first six months of 2005. Overall, the port offloaded 1,654,483 cargo containers during the first six month of 2005.
The bipartisan letter to Snow follows:
February 16, 2006
Secretary John W. Snow
Department of Treasury
1500 Pennsylvania Ave., NW
Washington, DC 20220
Dear Secretary Snow,
We are writing to express our concerns with the impending acquisition of Peninsular and Oriental Steamship Navigation Co. (P&O) by DP World, a company owned and controlled by the Government of Dubai, United Arab Emirates (UAE). This transaction will result in foreign government control of P&O Ports, North America (P&O subsidiary), the largest port operator on both the Eastern U.S. Coast and U.S. Gulf Coast. We are concerned that the Administration is not giving this case the appropriate level of scrutiny required by law and ask that you direct the Committee on Foreign Investment in the United States (CFIUS) to conduct a full 45-day investigation.
Federal law requires the President or his designee investigate the impact on national security of a foreign acquisition if the acquisition "could result in control of a person engaged in interstate commerce in the United States that could affect the national security of the United States." (50 USC App. §2170). The President has delegated this investigative authority to CFIUS of which you are Chairman. We understand that CFIUS has chosen not to conduct a formal investigation.
The law further mandates one of several factors be considered in determining a threat to national security: "The control of domestic industries and commercial activity by foreign citizens as it affects the capability and capacity of the United States to meet the requirements of national security." Our country's maritime ports are critical to our national security, vital to our military capability, and essential to our economy. Some 95 percent of all goods imported to the U.S. arrive through our ports.
Most importantly, our ports are our most vulnerable targets for terrorist attack. Despite efforts to improve port security by the Administration, only one in 20 shipping containers entering the U.S. is physically inspected. A single terrorist incident could shut down our system of container transportation, affecting our entire economy, as well as facilities relied on by the Department of Defense as military load-out ports.
Dubai, which owns and controls the acquiring company in this case, has been named as a key transfer point for shipments of nuclear components that were shipped to Iran, North Korea, and Libya, which were sold by Pakistan's nuclear scientist A.Q. Khan. In addition, the UAE was one of only 3 countries (including Pakistan and Saudi Arabia) that recognized the Taliban as the legitimate government of Afghanistan.
According to the Congressional Research Service, many U.S. officials believed that al Qaeda activists have spent time in the UAE. In fact, two of the 9/11 hijackers were UAE nationals (Fayez Banihammad and Marwan al-Shehhi), and the Federal Bureau of Investigation claimed the money used for the attacks was transferred to the 9/11 hijackers primarily through the UAE's banking system. Furthermore, after the 9/11 attacks, your department complained of a lack of cooperation by the UAE and other Arab countries as the U.S. was trying to track down Osama bin Laden's bank accounts.
In light of these considerations, we expect CFIUS, as the President's designee, to undertake a complete and thorough investigation of this acquisition in accordance with Federal law. The National Commission on Terrorist Attacks Upon the United States (a.k.a., "the 9/11 Commission") found that on September 11, 2001, the "most important failure was one of imagination."